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Informist, Monday, Feb. 17, 2025

By Alina Geogy

MUMBAI – Traders covered their short positions in February futures contracts of the Nifty 50 on Friday. The short covering, indicating a reversal in bearish sentiment, follows the Nifty 50's recovery from intraday lows. The benchmark index snapped an eight-day losing streak Monday, however, the derivatives data revealed uncertainty about the direction of the Nifty 50 for the near-term. 

Short covering was triggered after the Nifty 50 failed to move more beyond Friday's low of 22774.85 points, which was also its lowest level in eight months, Anshul Jain, head of research at Lakshmishree Investment and Securities, said. The Nifty 50 had fallen over 200 points, or 0.9%, to a fresh eight-month low of 22725.45 points early Monday. However, it came off lows soon and eventually recovered to settle at 22959.50 points, up 30.25 points, or 0.1%. 

The Nifty 50's total trade volume was 207.35 million, the lowest volume since Jan. 01. The February futures contract of the Nifty 50 closed at a premium of 83.90 points to the spot index Friday, with open interest rising 1.5% to 17.65 million.

The highest open interest addition in options contracts of the Nifty 50 was seen at the 23700-23600 point-strike prices on the call side, and at 22000 and 22600 strikes on the put side. The Nifty 50 is expected to move within a range of around 180 points on Tuesday, within 23050-22870 points, technical and derivatives analysts said.

Concerns over weak growth in domestic corporate earnings and worries that the US will impose tariffs is weighing on investor sentiment, analysts said. The ongoing depreciation of the rupee and outflows from foreign institutional investors will also dent sentiment, they said.

Traders exited long positions in most deep out-of-the-money call options and added short positions to the call out-of-the-money strikes which are 1-4% higher than the spot level. Meanwhile, they covered short positions in at-the-money and some in-the-money call options.
 

--Nifty 50 Feb closed at 23043.40, down 47.75 points
--Nifty 50 Mar closed at 23178.35, down 49.30 points; 218.85-point premium to spot index
--Nifty 50 Apr closed at 23319.35, down 41.50 points; 359.85-point premium to spot index

ICICI Bank, Mahindra & Mahindra, HDFC Bank, Reliance Industries, Manappuram Finance, Bajaj Finance, State Bank of India, Bajaj Finserv, Bharti Airtel, Tata Motors, Axis Bank, Infosys, Dixon Technologies (India), Hindustan Aeronautics, and Bharat Electronics were the most actively traded underlying stocks Monday.  End

Edited by Deepshikha Bhardwaj

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